BagThat, a new UK entrant to the daily-deals/e-commerce space, has picked up an investment of £2 million ($3.2 million) to develop its service, a mash-up of two well-known models for selling products online: auctions and group buying.
The funding is being led by Oxford Capital and is the first close on this round. BagThat says it is expecting additional institutional investment in the round.
Part eBay and part group-buying site (eg Groupon), BagThat is a clever kind of twist on both ideas, in which a user can bid on an item with a price that he/she is willing to pay for it, using a simple sliding feature to pick a price in a range set by the seller.
The system then collects all the bids from other users, and calculates a final selling price for the item, based on the minimum total amount that the retailer was willing to make from the deal. If enough people bid on the item in the bidding phase, with a total amount reaching the seller’s reserve, then they win the product: that final price might be the same price the buyer offered, or it might be lower — but never higher. PayPal is used for all the transactions on the site.
The social aspect of the site also includes the ability for bidders to spread the word to their friends on Facebook, Twitter and other social networks to try to get others to join in on the deal — the more who join, the more likely the final price will be lower.
Will this new variation be enough to bring in punters to a new site, in a market that already has established players like eBay, Groupon, LivingSocial and others?
It will probably, most likely, depend not on the new brand but what BagThat offers through its retailing portal. For now, the selection on the site — which launched in November 2011 and is founded by Andy Sutton, who is also the CEO – is relatively streamlined rather than sprawling, and is covering several different bases: food/drink; fashion; home goods and vacations among them, with higher-end rather than cheaper offerings. (Examples: an Apple TV box, a man’s suit, a cute teddy bear)
It looks like that list will be growing with retailers like Halfords (a UK sporting goods retailer) and brands like Samsung signing up to BagThat for future deals.